Yesterday was DAY 27 of New Zealand in lock down as we try to fight the COVID19 pandemic.
When I woke up yesterday morning and turn on my social media, my initial thoughts were to look for the latest controversy from United States President Donald Trump’s press conferences. Instead one of the first things that came up on Twitter was an article from well leftist blogger Martyn Bradbury (CitizenBomber). Mr Bradbury was trying to understand how the international oil market, which has slumped massively as a result of COVID19, could go into negative territory – i.e. be effectively worthless.
My reaction to this news was mixed. On one hand I thought no doubt there will be many relieved New Zealanders who hope that the costs will be matched to some extent by a significant drop in petrol and diesel prices here. With that, equally they will be hoping that the cost of transporting goods is reflected in a drop their prices upon arrival at their point of sale. Also happy, I imagine will be the environmental movement, who will be hoping that the inevitable revival is checked by a change in how New Zealanders get around.
On the other hand, despite those many people working in what the political left term a “sunset industry”, I could not help but feel sorry for the thousands of people who work in the immediate refinery and distribution parts of the industry. The industry will definitely try to mount a revival, but its greater challenge could be a long term one to see how willing it is to invest in biofuel and hydrogen research.
No doubt the petroleum industry would have been shocked by this historic low. One month in which the developed world and much of the developing world has effectively ground to a halt except for essential businesses will no doubt cause a major dip in profit margins. It is unlikely even if all developed nations started significantly scaling back their COVID19 containment measures tomorrow, that prices would recover for 18-24 months if not significantly longer. Many countries are now seeing literal air quality improvements from the absence of petroleum and diesel powered transport before their eyes – in Punjab, one can see the Himalaya’s for the first time in 30+ years; Los Angeles, long known for its smoggy skies will be enjoying its cleanest view of the San Bernadino mountains in a long time.
The greatest challenge will be political. The technological means to invest in hydrogen and biofuel research are already here. The challenge for politicians will be extricate themselves from big oil’s embrace and taking steps to ensure that the few silver linings of a crisis in world history that has otherwise been a monumental disaster, are not lost on us.